Appeals court weighs Justice deal to settle Iran charges

AP News
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Posted: Sep 11, 2015 4:10 PM

WASHINGTON (AP) — A federal appeals court on Friday considered whether a judge could reject as too lenient a deal to settle criminal charges against a Dutch company accused of illegally selling aircraft parts to Iran, Sudan and Myanmar.

The U.S. Court of Appeals for the District of Columbia heard arguments in a case involving the Justice Department's decision not to prosecute Fokker Services BV under an agreement that called for $21 million in penalties.

A federal judge earlier this year refused to accept the deal, which he called "grossly disproportionate to the gravity of Fokker Services' conduct in a post-9/11 world."

The dispute comes as the Justice Department this week trumpeted its commitment to hold company executives more accountable for corporate fraud. The new guidance follows persistent criticism that the department has not been aggressive enough in prosecuting individuals for financial misconduct, including after the mortgage crisis that led to an economic meltdown.

The Justice Department says the judge is interfering with the discretion of prosecutors, but that argument faced resistance from the three-judge panel hearing the case. All three appellate judges agreed that courts have some authority to decide whether to accept settlements, though they disagreed over the extent of that authority.

"You have a very steep hill to climb," Judge David Sentelle told Justice Department lawyer Aditya Bamzai during arguments that took place on the 14th anniversary of the Sept. 11 terrorist attacks.

Bamzai conceded that judges have authority to disapprove of such deals, known as deferred prosecution agreements. But he called U.S. District Judge Richard Leon's review "too intrusive."

Under the deal, Fokker agreed to forfeit $10.5 million to the government and agreed to pay a civil penalty of $10.5 million to settle charges it conspired to violate the International Emergency Economic Powers Act. The total was equal to Fokker's gross revenue for the shipments, and prosecutors said it was fair because the company cooperated with the government's investigation and agreed to punish those employees who were involved.

The illegal exports began in 2005 and ended in 2010 after the company voluntarily reported the misconduct to the government, the Justice Department said.

Leon rejected the deal for not making the company pay more than it earned from the sales to "one of our country's worst enemies." He said it undermined the public's confidence in the administration of justice "to see a defendant prosecuted so anemically." And he scolded the government for not seeking an independent monitor to ensure the company's future compliance.

Leon said he was open to seeing a modified version of the settlement deal, but the government and Fokker both chose to appeal instead.

Fokker's lawyer Edward O'Callaghan argued that no judge had ever before rejected such an agreement. Unless the appeals court reverses, he said the company would face "irreparable harm" because it has already admitted fault and now could be prosecuted.

But Judge Laurence Silberman said the risk of prosecution seemed unlikely.

A ruling could take several months.